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ESMA Makes Available The Recording Of The Open Hearing On EMIR
March 8, 2012--On 6 March 2012, ESMA organised a Public Hearing on draft technical standards on EMIR.
Due to a limited number of places at this hearing, a recording was made, which ESMA makes available on the following page: http://esma.europa.eu/page/post-trading
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Source: ESMA
Clearstream and Deutsche Bank partner to facilitate market access to Russia
March 8, 2012--Clearstream and Deutsche Bank, partners in the Russian market for 6 years, continue to facilitate market openness in the region.
Clearstream, via its Russian agent Deutsche Bank Ltd. Moscow, now has successfully settled its first domestic government bond transaction on an over-the-counter (OTC) basis. This type of transaction represents a significant step forward in the liberalisation of the Russian government bond market: Clearstream customers can now safekeep Russian government bonds (OFZ bonds) in addition to Russian equities. The expansion of the service for Russia has been made possible by recent changes in the local securities market regulation. The changes were developed through close collaboration between local market participants and regulators.
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Source: Clearstream
Commission acts to increase the safety and efficiency of securities settlement in Europe
March 7, 2012-- As part of its ongoing efforts to create a sounder financial system, the European Commission has proposed today to set up a European common regulatory framework for the institutions responsible for securities settlement, called Central Securities Depositories (CSDs). The proposal will bring more safety and efficiency to securities settlement in Europe. It also seeks to shorten the time it takes for securities settlement and to minimise settlement fails.
Commissioner for Internal Market and Services Michel Barnier said: "I am committed to ensuring that all financial markets are properly regulated and supervised. Settlement is a crucial process for the securities markets and the financing of our economy, and as such its safety and efficiency needs to be ensured. The numbers speak for themselves: in the European Union, transactions worth over one quadrillion euro were settled by CSDs in the last two years. Today's proposal will introduce, in line with our international partners, common standards across the Union for securities settlement and CSDs to ensure a true single market for the services provided by national CSDs."
The proposal contains the following key elements:
The settlement period will be harmonised and set at a maximum of two days after the trading day for the securities traded on stock exchanges or other regulated markets (currently two to three days are necessary for most securities transactions in Europe).
Market participants that fail to deliver their securities on the agreed settlement date will be subject to penalties, and will have to buy those securities in the market and deliver them to their counterparties.
Issuers and investors will be required to keep an electronic record for virtually all securities, and to record them in CSDs if they are traded on stock exchanges or other regulated markets.
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Source: Europa
STOXX announces new composition of Select Dividend, Style and Grand Prix Indices
March 7, 2012--Results of the Review to be Effective on March 19, 2012
March 7, 2012--STOXX Limited, the market-moving provider of innovative, substantial and global index concepts, today announced the results of the annual review of the STOXX Select Dividend Index series and the STOXX Global Grand Prix Index; as well as the result of the semi-annual review of the
STOXX TMI Growth and STOXX TMI Value indices, their respective large, mid- and small sub-indices and the respective indices for the euro zone.
All changes will be effective on March 19, 2012.
The STOXX Europe Maximum Dividend 40 Index is also part of this regular review. Its new composition can
be found on the respective index page at www.stoxx.com on March 19, 2012.
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Source: STOXX
Commission proposal on improving securities settlement in the EU and on Central Securities Depositaries - Frequently Asked Questions
March 7, 2012--1. What does the proposed regulation address?
The proposal aims to harmonise both the timing and conduct of securities settlement in Europe and the rules governing Central Securities Depositories (CSDs) which operate the infrastructures enabling settlement.
With regard to settlement, the proposal harmonises timing and discipline of securities settlement in the EU.
Regarding CSDs, it creates, for the first time at European level, a common authorisation, supervision and regulatory framework for CSDs.
2. What is settlement?
Any trade in securities on or off a trading venue is followed by a post-trade flow of processes, including for example confirmation of the trade details by a trading venue or clearing by a central counterparty (CCP), leading to the settlement of the trade, which means the delivery of securities to the buyer against the delivery of cash to the seller. Settlement may occur on the day of the trade, but more often a number of days later depending on the type of securities, the type of trading venue, or the type of market concerned.
3. What are CSDs?
The CSDs are the key institutions that operate the infrastructures (so-called securities settlement systems) that enable settlement. They are the institutions which materialise the transactions concluded on the markets. It is with them that settlement is either finalised, or fails. CSDs also ensure the maintenance of securities accounts that record how many securities have been issued by whom and each change in the holding of those securities. This is made possible by the fact that CSDs intervene on the primary market, by centralising the initial recording of newly issued securities. CSDs also play a crucial role for the financing of the economy, as in practice almost all the collateral posted by companies, banks and other institutions to raise funds flows ultimately through securities settlement systems operated by CSDs.
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Source: Eurostat
SIX Swiss Exchange And Scoach Switzerland: Trading Turnover Rises In February 2012
March 7, 2012--The statistical monthly report published today contains the latest trade and turnover figures for SIX Swiss Exchange.
As the latest statistical monthly report shows, trading volumes on SIX Swiss Exchange and Scoach Switzerland rose once again in February 2012. All segments combined posted growth of 12.2% on the previous month, reaching CHF 88'885 million. January 2012 had already seen double digit growth. While equities, including funds + ETSFs + ETPs, recorded gains of 14.7% (to CHF 58'093 million) and ETFs were up by 18.6% (to CHF 7'630 million), turnover in the CHF bonds segment rose by 6.0% (to CHF 19'039 million); only structured products and warrants were down by -10.2% (to CHF 2'999 million).
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Source: SIX Swiss Exchange
European Supervisory Authorities publish today a joint Discussion Paper on Draft Regulatory Technical Standards foreseen by the European Market Infrastructure Regulation (EMIR)
March 6, 2012--EBA, EIOPA and ESMA (the ESAs) invite market participants and all interested stakeholders to provide their feedback on planned regulatory technical standards covering risk mitigation techniques for OTC derivatives not cleared by central counterparties.
The EMIR Regulation ("the Regulation") on OTC Derivatives, CCPs and trade repositories introduces provisions to improve transparency and reduce the risks associated with the OTC derivatives market and establishes common rules for central counterparties (CCPs) and for trade repositories (TRs). The Regulation acknowledges that not all OTC derivatives would meet the necessary requirements to be centrally cleared. For this reason, it introduces provisions on risk mitigation techniques for OTC derivatives not cleared by a CCP.
EDHEC-Risk Institute research sees social infrastructure as too small and risky to be attractive to pension funds
March 6, 2012--In a new study entitled "Pension Fund Investment in Social Infrastructure: Insights from the 2012 reform of the private finance initiative in the United Kingdom," EDHEC-Risk Institute has identified two fundamental issues that make social infrastructure potentially unattractive to pension funds: in-built political risk and limited asset pool size.
Social infrastructure investments deliver public assets and services, such as schools and hospital buildings, in exchange for a revenue stream paid directly by the public sector. It is typically opposed to economic infrastructure, which collects revenues from end users and can include toll roads, airports or power generation.
visit www.edhec-risk.com for more info.
view the EDHEC-Risk Publication Pension Investment in Social Infrastructure
Source: EDHEC-Risk Institute
Russell Investments Launches Russell Europe SMID 300 Index
March 06, 2012 --Russell Investments today announces the launch of the Russell Europe SMID 300 Index, providing the first index of highly liquid and rapidly tradable small-and mid-cap European stocks designed to be used as the basis of investable products. This is one more in a series of product and service enhancements introduced by Russell Indexes to European clients in the last year as the firm continues to build on its global capabilities.
Scott Stark, head of Russell Indexes Europe, comments, "There is significant demand in Europe for an investable small- and mid-cap index from hedge funds, asset managers and the trading community looking to gain exposure to this area of the European equity market. The Russell Europe SMID 300 Index was developed after lengthy consultations in Europe with a number of large financial institutions including Deutsche Bank, Goldman Sachs and UBS. As a result, the key feature of the new index is its tradability."
The new Russell Europe SMID 300 Index comes at a time of increased focus on European small- and mid-cap equities. At the same time, it builds on the core strengths of Russell Indexes while addressing a critical challenge in European portfolio construction. "The trend we see in small- and mid-cap stocks since the beginning of the year is confirmation that the Eurozone crisis has been steadily abating thanks to policy action by the central bank and the European Union leaders," said James Barber, portfolio manager of European multi-manager funds at Russell Investments Europe. "This progress is tenuous, however, and we could be back at the precipice later in the year. We would expect small- and mid-cap stocks to reflect any changes in the risk outlook in Europe."
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Source: Russell Investments
DB - Equity Research-ETF Research :Monthly European ETF Market Monitor and ETF month in perspective
MArch 6, 2012--ETF month in perspective:
European ETF Market Monthly Monitor: Fixed income ETFs: Corporate credit benchmarked ETFs take front seat
February was a positive month for the European ETF industry bringing net inflows of €1.5 billion. This level of flows is at par with the comparable month last year that brought in €1.4 billion at the time. Equities accounted for €1.2 billion, fixed income €80 million, commodities €27 million and alpha driven strategies added €254 million in February.
In terms of direction, February marked a solidification of the trend we have observed in January, with investors continuing to return to the market selectively, after the long drought of the second half of 2011.
The size of February flows was satisfactory but by no means exceptionally high and it was not what left the stronger mark on this year's ETF investment calendar. It is the focus and directionality of flows that are the big news this month. Both equity and fixed income flows showed strong directionality, even though the surface might point to a flat-line, especially for fixed income ETFs.
European ETF total assets also continued to rise in February, reaching €228.1 billion and adding 3.1% over January month end levels. Asset price rises contributed 2.4% while new money accounted for 0.7% of the growth.
General equity theme: Re-emergence of EMs
Equity inflows clearly had an emerging markets flavor, with total emerging market inflows totaling €1.2 billion for February. MSCI Emerging Markets benchmarked ETFs receiving €760 million, the month's biggest equity trend, while BRIC countries received an additional €367 million. LATAM broad index benchmarked ETFs also received €112 million. Within BRIC, all countries saw positive flows, with China [€153 million] and Russia [€100 million] attracting the highest levels.
The largest single ETF recipients were the iShares MSCI EM ETF [€243 million], the Credit Suisse MSCI EM ETF [€197 million] and the db x-trackers MSCI EM ETF [€126 million].
The emerging markets theme continues from January, when emerging markets benchmarked equity ETFs received €903 million. Interest in January was somewhat different than February, when broad EM benchmarked ETFs [€385 million] received less than country and region specific ETFs [€518 million].
European equity benchmarked ETFs continue to lose assets
Developed market equity benchmarked ETFs in February presented the opposite picture when compared to emerging markets. They continued to lose assets, with US and France leading the outflows, registering €285 million and €235 million respectively.
The overall outflows from Europe represent a continuing – albeit slowing - trend from January, when European developed equity market benchmarked ETFs experienced outflows of €663 million. Germany was the leading source of outflows in January, with €400 million of outflows.
US high-tech, energy and dividends get preference over broad blue chip indices
European domiciled US equity market benchmarked ETFs experienced strong inflows in January, totaling €569 million. They however experienced outflows in February totaling €285 million, largely driven by S&P500 benchmarked ETFs.
US domiciled ETFs benchmarked to the US equity market experienced flows inflows of $11.2 billion in January 2012 and outflows of $186 million in February 2012. This is a trend that is similar to that observed for European domiciled ETFs that track the US equity market. However, looking below the surface, US domiciled ETF investors took much more targeted positions, than the respective European investors, when making decisions about the US equity market.
US domiciled S&P500 benchmarked ETFs experienced outflows of $4.8 billion in the first two months of 2012 [January: $30 million, February: $4.7 billion]. In fact, S&P500 benchmarked ETFs outflows represent the largest US equity trend, when looked at by benchmark.
The non S&P500 US domiciled ETF inflows into US equity market benchmarked ETFs were driven by targeted views on specific sectors. The top ten US equity ETF benchmark flows YTD, totaling $9.8 billion, represent 87% of the total US equity market ETF flows. These flows were received by ETFs that are benchmarked to high-tech, energy and selective dividends.
Fixed income theme: Corporate bonds attract strong interest
Overall European domiciled fixed income funds have received net inflows of €501 million since the beginning of the year. Corporate & credit benchmarked ETFs have received total inflows of €1.7 billion, while sovereign benchmarked ETFs have experienced outflows totaling €976 million.
Decisive switch into Euro corporate bonds as spread levels decline
February marked a decisive change in directional activity for fixed income, in the non-sovereign fixed income part of the European ETF market. Historically in Europe, fixed income ETF trends had been driven [and often dominated] by sovereign flows, which due to the size of the sovereign part of the fixed income ETF market [55%] dictated overall fixed income activity. Sovereign driven trades are generally defensive in nature, while the recent fixed income ETF flows signal investors using corporate and credit benchmarked ETFs to more actively to draw returns.
In developed market issued debt, there has been a clear shift from European sovereigns [outflows of €976 million] and money markets [outflows of €528 million] towards – mainly European issued – corporates [inflows of €1.5 billion]. Both corporate as well as emerging market and high yield benchmarked ETFs started to see positive flow activity since the beginning of 2012. This activity is characterized by clear trending, both with regards to size as well as direction.
The outflows from sovereign and into corporate and credit is a theme that has held since the beginning of the year. Sovereign benchmarked ETFs had outflows of €144 and €833 million for each January and February 2012, while corporate and credit benchmarked ETFs had inflows of €627 million and €1.0 billion over the same respective months.
These fixed income market components have been active in the US fixed income ETF market for the past three years, but European investors stayed largely out. This move points to European domiciled investors continuing to come out of their shell [a state prevalent over the second half of 2011] and focusing on corporate credit and high yield debt.
Declining spreads accompany inflows into corporate benchmarked ETFs higher
Cash flows into corporate & credit benchmarked ETFs has followed a steady and upward trend since the beginning of the year, with cash flows exhibiting acceleration in February 2012 [totaling €1.0 billion]. This trend took place as corporate bond asset swap spreads declined.
A similar positive cash flow trend materialized in the high yield component of the European fixed income ETF market, however, its cash flow impact was much smaller [2012 YTD €358 million].High yield benchmarked ETFs comprise 3.9% of the European fixed income market.
ETF comparatives: Mutual Funds, cash equity turnover
European ETF turnover, declined to 7.2% [from 8.0%] as of the end of February 2012. The equivalent number for the US market stands at 24.2% for the same period, down by 0.3% from the end of January 2012.
European ETFs comprised 2.7% of the continent's mutual fund industry as of December 2011. European domiciled ETFs registered outflows of €3.3 billion over the fourth quarter of 2011, while UCITS mutual funds registered over 17x higher outflows, totaling €55.3 billion.
Mutual fund industry data as per the European Fund Management Association [EFAMA] and are currently available until the end of 2011.
US ETFs comprised 8.4% of the mutual fund industry as of the end of January 2012, up from 8.1% at the end of December 2011.
US domiciled ETFs registered inflows of $27.0 billion in January 2012, while US mutual funds registered inflows of $35.6 billion over the same period.
Mutual fund industry data as per the Investment Company Institute [ICI].
To request a copy of the report
Source: Christos Costandinides, European Head of ETF Research & Strategy, Deutsche Bank
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